Infosys shares fell nearly 5% to their day’s low of Rs 1,832 on Friday, January 17, after the company reported its Q3 results. It posted an 11% YoY growth in consolidated net profit, reaching Rs 6,806 crore, which failed to cheer D-St investors, while revenue from operations increased 8% YoY to Rs 41,764 crore.Meanwhile, India’s second largest IT services exporter has revised its revenue guidance upwards to 4.5%-5% for the current fiscal year.

Infosys recorded a robust constant currency revenue growth of 6.1% YoY, with a 1.7% quarter-on-quarter (QoQ) increase. The company expects operating margins to remain between 20%-22% in FY25.

Operating profit during the third quarter increased 12% YoY to Rs 8,912 crore, while operating margins expanded 80 basis points to 21.3%.

The company has clocked a large deal TCV (total contract value) of $2.5 billion during the December quarter, which was up marginally from $2.4 billion in the preceding September quarter.

Infosys Management Commentary – Q3 Results

“Our strong revenue growth sequentially in a seasonally weak quarter and broad-based year on year growth, along with robust operating parameters and margins, is a clear reflection of the success of our differentiated digital offerings, market positioning, and key strategic initiatives,” said Salil Parekh, CEO and MD, Infosys.

Infosys said it continues to strengthen enterprise AI capabilities, particularly focusing on generative AI, which is witnessing increasing client traction.This has led to another quarter of strong large deal wins and improved deal pipeline giving the company greater confidence as it looks ahead.

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Should you buy, sell, or hold Infosys’s stock? Here’s what analysts say:

Nuvama

Nuvama maintained its ‘Buy’ rating on Infosys, raising the target price to Rs 2,350 from Rs 2,250.

The company beat estimates, primarily due to higher pass-through revenue. Infosys continues to show strong momentum in the Banking, Financial Services, and Insurance (BFSI) sector, with margins in line. However, Q4 is expected to be seasonally weak. Clients are focusing more on cost-takeout deals than discretionary spending.

The management has upgraded FY25 revenue growth guidance to 4.5-5%, up from the previous 3.75-4.5%, and maintained a margin guidance of 20-22%. This marks the third consecutive quarter of upgraded guidance, reflecting improving macroeconomic and business fundamentals.

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Morgan Stanley

Morgan Stanley maintained its ‘Overweight’ rating on Infosys, with a target price of Rs 2,150.

The company reported stronger-than-expected revenue growth in Q3, driven by a higher proportion of third-party items. However, the new guidance is lower than estimates. For Q4FY25, Infosys’ revenue growth guidance implies a decline of -2.3% to -0.3%, compared to market expectations of -1% to 1%.

BofA

BofA maintained its ‘Buy’ rating on Infosys, with a target price of Rs 2,150.

A sequential revenue decline of 1% is expected for Q4FY25, potentially due to a decline in third-party items or a conservative company stance. Discretionary spending shows signs of recovery in the European BFSI and US retail/CPG segments, while spending remains unchanged in the hi-tech and communications sectors. Annual wage hikes in India are planned at 6-8%, in line with expectations.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)